MIAMI — Former presidential candidate Andrew Yang says Covid stimulus checks are not to blame for the recent spike in inflation — and he’s still in favor of sending people free cash to protect workers from economic shocks and technological disruptions.
The Universal Basic Income (UBI) evangelist told CNBC on the sidelines of the Bitcoin Miami conference that stimulus checks account for “maybe 17%” of the money being spent with the CARES Act — a measure passed by Congress by around trillions of dollars in stimulus funding to unlock Support the economy amid global lockdowns.
“Where did the other 83% of the money go? It went to institutions. It went to pipes,” said Yang, who was running for mayor of New York City and US president on a platform that advocated guaranteed monthly payments from the government to all citizens ages 18 to 64, with no strings attached.
“Money in people’s hands for a few months last year — in my opinion — was a very, very small factor because most of that money has been spent for a long time and you see inflation continue to rise,” Yang said. who also pointed out that before the pandemic and economic impact payments, the main drivers of inflation were staples like education, healthcare and housing, all of which were independent of stimulus checks.
Consumer prices rose 8.5% in March, reflecting a rise not seen in the US since 1981. The surge in inflation has a lot to do with not enough goods to circulate, Yang said, as people experience pent-up demand.
“Everyone is worried about inflation. I worry that it’s making life difficult for many Americans because it’s a very difficult circumstance when your expenses are increasing and maybe your income isn’t keeping pace,” said Yang, who has also said web3 is the most profound opportunity to fight poverty.
The erosion of the dollar’s purchasing power has led some to champion bitcoin as a hedge against inflation.
“I think interest rate levels will rise as people look for alternative ways to store value,” Yang said of Bitcoin. “People know that unless you get paid above the inflation rate, which is 7% these days, if you just have a bank account full of money, it’s unfortunately depreciating,” Yang said.
“Last time I checked, savings accounts were still paying a maximum of 1% or 2%.”
Where Bitcoin meets UBI
According to Yang, cryptocurrencies like Bitcoin are not just a hedge against inflation. You could also help realize his grand vision of widespread UBI adoption.
“The intersection is very important because if you’re trying to put purchasing power into people’s hands, one tool for that is the US dollar, and I’ve run for the presidency to make that case, but there’s no reason why this has to be in US dollars as opposed to bitcoin or any other asset class or currency,” Yang said. He believes we will see new public sector currencies.
“You can have municipalities and communities experimenting with local currencies that help direct people to local small businesses and nonprofits that may not be getting the support they need right now,” he said.
Much like Beijing is considering attaching expiration dates and other spending rules to its digital yuan (China’s central bank digital currency in development since 2014), Yang says a similar model could work well in the US
“Nobody thinks of getting a US dollar and it expires or it can only be used in one place and not another. But these are utilities that we should now experiment with in different environments,” Yang said.
During the pandemic, Mark Cuban suggested doing just that: sending out money cards that can only be used in small, locally owned businesses where the money expires in two weeks to boost activity. Yang says these are the sort of things that “cryptocurrencies naturally allow US dollars not to do.”